Netflix, AT&T Cut Interconnection Deal

Process Should Be Wrapped Up ‘In The Coming Days’
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AT&T and Netflix on Tuesday confirmed that they have inked an interconnection deal that, once executed, should improve the quality of streams delivered on the telco’s broadband network.

Both companies released statements they reached the deal in May and have been working together since to provision additional interconnect capacity to “improve the viewing experience for our mutual subscribers.”  They have begun to turn up those connections, and expect the process to be “complete in the coming days.”

Word of the deal, reported first by Mashable, comes about five months after AT&T said it was in discussions with Netflix about forging a more direct connection. It also comes after Netflix begrudgingly signed similar paid interconnection pacts with Comcast and, more recently, with Verizon Communications. Netflix prefers that ISPs join Open Connect, its private content delivery network that relies on edge caches.

Netflix has openly complained that some major ISPs have allowed their peering points to degrade to force paid interconnection deals that Netflix views as an “arbitrary tax” on it and other over-the-top video service providers. Further, Netflix has been urging the FCC to include paid peering and interconnection deals into the discussion as the Commission pursues new network neutrality rules.

And AT&T and Netflix have been arguing on the topic for months. AT&T policy exec Jim Cicconi unloaded on Netflix and its CEO, Reed Hastings, in March, claiming that the streamer was looking for a “free lunch” and proposing that all broadband users pay the freight for Netflix streaming. Cicconi and Netflix policy exec Chris Libertelli traded barbs on the topic again in June at a panel at the Aspen Institute, an argument that took place after the two companies had already inked the deal.

The agreement should improve Netflix streaming performance on AT&T’s wired broadband networks. AT&T hasn’t been performing well in comparison to other ISPs, according to Netflix’s monthly ISP Speed Index. For June, Netflix said AT&T U-verse delivered an average Netflix stream of 1.5 Mbps, placing it as No. 13 of the 16 major ISPs it ranks. AT&T DSL, at 1.13 Mbps, was 15th on Netflix’s list for the month.